Education fraud checks ineffective: IBAC

Nino Napoli managed an education department budget of up to $5.5 billion, so corrupt transactions up to a million dollars wouldn't have rung alarm bells, an anti-corruption inquiry has heard.

The now-sacked department finance manager was part of a "boys club" within the education department who went to great pains to hide his transactions, his former boss, Claire Britchford, has told an Independent Broad-Based Anti-Corruption Commission hearing.

Mr Napoli is accused of siphoning up to $2.5 million into personal slush funds from "banker schools", which were holding funds for other nearby schools.

Ms Britchford, a former chief financial officer, says the department had anti-fraud processes in place to ensure no one person had control of transactions.

But evidence presented to IBAC showed those processes were ineffective, she says.

"I think the degree of collusion that was going on meant the segregation of duties and controls were completely overridden, which meant they were not effective," she said.

While she did not say which staff members colluded, she admitted Mr Napoli and former department deputy secretary Jeff Rosewarne were part of a "boys club" within the department.

She said Mr Napoli also seemed to have close relationships with school principals who were authorising payments from the banker schools.

"The principals seemed to, even though they didn't report to him, trust him and do what he asked them to do," she said.

Ms Britchford, who now has another role in the department, said payments made by Mr Napoli were not significant enough to come to her attention at the time.

"When there's hundreds of millions of dollars being managed in that way, a few thousand would not show up," she said.

Counsel assisting the commission Ian Hill, QC, asked whether someone motivated, like Mr Napoli, could in future hide up to a million dollars without being discovered.

Ms Britchford said that was correct.

"Certainly someone who had intentions that were corrupt, that had a collusion within their delegation, that would be hard to stop," she said.

The final witness is expected to be called on Tuesday.